Energy costs slashing business investment

The energy crisis facing eastern Australia is threatening to derail the economy, with almost three quarters of SMEs faced with the prospect of reducing investment to cope with soaring bills.

An East & Partners SME survey of 1,280 businesses revealed 70 per cent would reduce their investment in capital expenditure due to rising energy costs.

While short-term capex is the main victim, accounting for 39.5 per cent of SMEs, 20.8 per cent would look to cut long-term investment – demonstrating a real and sustained threat to the economy.

Even more concerning was the 9.9 per cent that said both their short and long-term capex would be cut to accommodate higher energy costs.

“The Finkel Report provided a roadmap to repair the long-term damage of failed policies. All parties and all governments should endorse the report, remove bans on gas exploration and adopt a bipartisan approach to provide investment certainty,” said Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell.

“The danger with continued political bickering is that businesses will go to the wall, jobs will move offshore and be lost, and consumers will feel even greater pain.”

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Ms Carnell criticised politicians on both sides of the political spectrum at a state level for failing to deliver meaningful solutions and a co-ordinated national approach.

“The ACCC has revealed the impact of gas exploration bans on supply and distribution in Victoria and New South Wales, but these governments continue to shift the blame elsewhere,” she said.

“Meanwhile, businesses in South Australia may have to use dirty diesel generators to keep the lights on over summer.”